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Tax Debt Collection

Tax debt collection as the UK emerges from Covid-19

Protecting livelihoods and keeping people in work remains the government’s priority. As it has been throughout the pandemic. HMRC has been central to delivering on this by pausing many debt collection activities and delivering support packages including Coronavirus Job Retention Scheme and Self Employment Income Support Scheme.

HMRC know’s that many customers – individuals and businesses alike – have been affected by COVID-19, and as a result, some face uncertain financial circumstances in the months ahead. They also understand that many customers are worried as the financial support schemes start to wind down, and want to offer practical support wherever possible.

As the UK emerges from the pandemic and economic activity resumes HMRC are restarting their debt collection work and will contact those who have fallen behind with tax payments.

HMRC’s message is simple:

if you can pay your taxes then you should do so – but if you’re struggling, we want to work with you to agree a plan based on your financial position.

The debt collection work is vital in order to bring in money to fund public services and to support the economic recovery and growth.

HMRC will do everything they can to help businesses with temporary cash-flow issues to survive as the economy grows. Although they have a responsibility to act where businesses have little chance of recovery.

What will HMRC do

When a customer has a tax debt, HMRC always try to contact them by phone, post or text message to discuss their situation and agree a way forward. Customers are urged to respond to these communications as soon as possible because, unless HMRC can discuss their situation, they cannot tell if they need support or are simply refusing to pay.

Customers can check if the contact they receive from HMRC is genuine, by using guidance on how to identify HMRC related scam phone calls, emails and text messages.

In all cases, HMRC want to work with customers to find a way for them to pay off their tax debt as quickly as possible, and in an affordable way. Everyone is different, so the support offered varies from customer to customer. This includes affordable payment options, such as a payment plan (called Time to Pay), where customers pay what they owe in affordable instalments. HMRC typically have more than half a million arrangements in place at any one time, and more than nine out of ten of them complete successfully.

Even if customers cannot pay anything straight away, by getting in touch HMRC can understand circumstances better and may be able to offer a short-term deferral. This means nothing would need to be paid for a set period of time, and no further action to collect the tax debt until that time has lapsed.

As part of agreeing Time to Pay arrangements with businesses, HMRC will also talk about other forms of support available they may be eligible for. For example, exploring the range of government-backed lending support like Bounce Back loans and Coronavirus Business Interruption Loans, and agreeing repayment holidays or extending repayment terms.

More information about payment arrangements (Time to pay) is available at How HMRC supports customers who have a tax debt.

Extra Support

HMRC Debt Management teams are trained to identify and support customers who might need extra help managing their financial affairs. They work with organisations such as Mind and the Alzheimer’s Society to help advisers identify and support customers who have mental health issues or who are demonstrating emotional distress.

Debt Advice

Where an individual or business is struggling to pay HMRC and other creditors, they can often benefit from independent debt advice. Advisers can help by providing information about how to access this advice.

For further advice contact AJR & Co Ltd